How to Amorlinc Function in Excel

Why This Task Matters in Excel

Depreciation is one of the most common yet intricate accounting calculations in corporate finance, fixed-asset management, and tax planning. A single organization may own hundreds or tens of thousands of assets—machinery, vehicles, servers, office equipment, even intangible assets such as patents. Each item must be depreciated period by period, and the depreciation rules often differ by jurisdiction, industry, and internal policy. Errors can lead to misstated financial statements, incorrect tax filings, and skewed performance metrics.

The AMORLINC function, short for “amortissement linéaire” (linear amortization in French), was added to Excel primarily to support French accounting standards, but its flexibility makes it valuable worldwide. Unlike the simple straight-line SLN function, AMORLINC supports irregular first periods. This is critical when an asset is purchased mid-period, because most accounting frameworks require prorating depreciation in that initial stub period. AMORLINC automatically does the proration for you, avoiding complex manual calculations.

Consider three scenarios:

1. A European manufacturing firm buys a robotic arm on 18 March. Their fiscal year ends 31 December. Depreciation starts the day after purchase, and the first period is only 289 days. AMORLINC correctly depreciates just those 289 days, then continues with full years thereafter.
2. A United States subsidiary that follows GAAP still needs an internal management report using the French linear method for head-office consolidation. AMORLINC lets them produce compliant numbers without leaving Excel.
3. A construction company invoices clients based on the partially depreciated value of rented equipment. By automating depreciation, they can generate accurate invoices directly from Excel.

Failing to grasp AMORLINC means you may:

• Manually build error-prone prorating schedules.
• Spend hours reconciling internal and external depreciation ledgers.
• Over-depreciate or under-depreciate assets, triggering audit adjustments.

Because Excel is nearly universal in accounting departments, mastering AMORLINC accelerates period-end closes, integrates seamlessly with PivotTables and Power Query, and allows rapid “what-if” modeling alongside other functions such as RATE, XNPV, and financial dashboards. In short, AMORLINC is the right tool whenever you need straight-line depreciation that respects partial first periods without resorting to VBA or external software.

Best Excel Approach

The AMORLINC function is the most efficient native-Excel method for linear depreciation with an irregular first period. Its advantages over alternatives (SLN, DB, and manual formulas) include built-in day-count conventions (basis argument), automatic first-period proration, and a parameter for specifying any later period you want to calculate.

Syntax:

=AMORLINC(cost, purchase_date, first_period_end, salvage, period, rate, [basis])

Parameter highlights:

• cost – Asset’s acquisition cost.
• purchase_date – Settlement or in-service date.
• first_period_end – End date of the fiscal period that contains the purchase date.
• salvage – Expected residual value when fully depreciated.
• period – The period number for which depreciation is returned (0 = first stub period).
• rate – Annual depreciation rate (in decimal form; 20 percent = 0.2).
• basis – Optional day-count convention (0 to 4).

When to use AMORLINC:

• Asset is depreciated straight-line.
• First fiscal period is shorter or longer than a full year.
• You need period-level values, not just one annual total.

When not to use it:

• Declining balance, double-declining, or sum-of-years-digits are required.
• Asset’s useful life or rate changes midstream.
• You need monthly depreciation (use period argument carefully or switch to a schedule approach).

Prerequisites:

• Dates must be valid Excel serial numbers.
• The same basis must be used consistently across assets of the same type.

Parameters and Inputs

Understanding each argument prevents common data-entry errors:

• cost – Numeric, positive, and generally in the company’s functional currency. Negative values return errors. Use cell references so updates flow through calculations.

• purchase_date – A valid Excel date. If imported as text, wrap with DATEVALUE or convert in Power Query.

• first_period_end – Another valid date and must be after purchase_date. For calendar fiscal years, this might be 31 December of the purchase year.

• salvage – Non-negative number. Salvage greater than cost has no business meaning and triggers negative depreciation, so validate before running the function.

• period – Whole number starting at 0. Period 0 gives depreciation for the stub period; 1 for the first full year, and so on. If you request a period beyond the useful life, AMORLINC returns zero.

• rate – Decimal number. Rate multiplied by cost gives annual depreciation before adjustments. For a 5-year life, rate ≈ 1 divided by 5 = 0.2. Some firms prefer using percentage: enter 20 percent and format as decimal.

• basis – Optional integer:
  0 = 30/360 US (default), 1 = Actual/Actual, 3 = 30/360 European, 4 = 30/360 German. Basis 2 (Actual/360) is not allowed for AMORLINC. If omitted, Excel assumes 30/360 US.

Validation Rules:

• purchase_date ≥ first day of fiscal year and ≤ first_period_end.
• first_period_end aligns with company fiscal calendar.
• rate greater than 0 and less than 1 (although Excel accepts any positive rate).
• Keep a lookup table of acceptable basis values and use Data Validation to restrict user entries.

Edge Cases:

• Leap year purchases with Actual/Actual basis.
• Salvage reaching zero earlier than expected because rate was set too high.
• Requesting a negative period returns a #NUM! error.

Step-by-Step Examples

Example 1: Basic Scenario – Calendar Fiscal Year

Business Context: A graphic-design studio buys a high-resolution plotter on 15 August 2023. Fiscal year ends 31 December 2023. The plotter cost is $10 000, estimated salvage $500, and useful life five years (rate = 0.2). They need depreciation for each period to feed the general ledger.

Sample Worksheet Setup

• B\2 = Cost → 10000
• B\3 = Purchase Date → 15-Aug-2023
• B\4 = First Period End → 31-Dec-2023
• B\5 = Salvage → 500
• B\6 = Annual Rate → 0.2

Enter periods 0 to 5 down column A starting at A9. In B9, type:

=AMORLINC($B$2,$B$3,$B$4,$B$5,A9,$B$6,1)

Drag down to B15.

Explanation:

• basis = 1 (Actual/Actual) because management prefers precise day counts.
• Period 0 covers 15 Aug to 31 Dec (139 days). Excel prorates: depreciation = cost × rate × (days/YearDays). With 365-day basis, YearDays = 365.
• For periods 1 through 4, depreciation is full-year: 10000 × 0.2 = $2000.
• Period 5 depreciates any remaining amount until book value equals salvage. In this example, the last period is slightly lower because annual depreciation would push book value below salvage.

Expected Results (rounded):
Period 0 → $761.64
Periods 1-4 → $2000
Period 5 → $738.36
Total equals cost minus salvage.

Troubleshooting:

• If you get #VALUE!, ensure date cells are real dates, not text.
• If Period 0 returns zero, your first_period_end might equal purchase_date.

Variations:

• Use basis 0 if your company insists on 30/360.
• To build a dynamic schedule, use a structured table and reference column names instead of fixed cell addresses.

Example 2: Real-World Application – Non-Calendar Fiscal Year

Scenario: An energy company’s fiscal year ends 30 June. They buy a turbine on 25 January 2024 for €3 500 000, salvage €200 000, useful life eight years (rate = 0.125). Finance must report depreciation for the stub period (25 Jan-30 Jun) and each subsequent fiscal year.

Worksheet Layout:

In C10, calculate depreciation for period listed in B10:

=AMORLINC($B$1,$B$2,$B$3,$B$4,B10,$B$5,$B$6)

Key Points:

• European 30/360 counts 30 days per month, 360 days per year, following continental conventions.
• First period is exactly 5 months; AMORLINC uses 150 days ÷ 360 = 0.4167 of a year.
• Subsequent fiscal years receive full depreciation until the book value reaches salvage.

Business Impact: By dropping this formula into a data table of all assets, the energy company produces IFRS-compliant depreciation that automatically feeds both statutory and management reports. They avoid custom SQL queries or ERP batch jobs, keeping the close process within Excel.

Performance Tips:

• Use Excel Tables so new assets auto-expand.
• Summarize with a PivotTable by cost center and fiscal year.
• For hundreds of thousands of assets, offload calculations to Power Pivot (DAX has AMORLINC-equivalent function) to reduce recalculation time.

Example 3: Advanced Technique – Portfolio of Assets with Different Day-Count Bases

Context: A multinational conglomerate tracks assets across the USA, France, and Germany. Each region uses its statutory basis: Actual/Actual, 30/360 European, and 30/360 German. Headquarters wants a single depreciation file but must retain regional compliance.

Data Organization Strategy:

• Create an Excel Table named AstTbl with columns: Cost, PurchaseDt, PeriodEnd, Salvage, Rate, Basis, Period.
• Basis column uses a dropdown list [1,3,4] mapped to region.

Enter the depreciation formula in a new column Dep:

=AMORLINC([@Cost],[@PurchaseDt],[@PeriodEnd],[@Salvage],[@Period],[@Rate],[@Basis])

Advantages:

• One formula serves thousands of rows; structured references adjust automatically.
• Regions can filter on Basis and view their own depreciation without touching underlying formulas.
• Since AMORLINC works row-by-row, no array formulas are needed, supporting Excel versions all the way back to 2007.

Error Handling & Edge Cases:

• Add an IFERROR wrapper to catch #VALUE! from blank rows:

=IFERROR(AMORLINC(...),0)

• Conditional formatting flags rows where Dep = 0 but Period < useful life, a sign the rate, salvage, or cost inputs are inconsistent.

Performance Optimization:

• Disable automatic calculation while pasting thousands of rows, then press F9 to recalc once.
• Break large tables into one worksheet per fiscal year and consolidate with Power Query for reporting.

Professional Tips:

• Document basis choices in a separate metadata sheet.
• Lock columns with formulas and protect the sheet to prevent accidental overwrites.
• Store useful-life policies (rate) in a lookup table keyed by asset class and use VLOOKUP or XLOOKUP to fill the Rate column automatically.

Tips and Best Practices

1. Use Structured Tables – Convert your asset list into an Excel Table so formulas copy down automatically and new rows inherit the AMORLINC logic.
2. Centralize Assumptions – Maintain a lookup sheet for rates, salvage percentages, and bases. Reference these cells instead of hardcoding, making policy changes painless.
3. Combine with PivotTables – Summarize depreciation by department, fiscal year, or asset class. Drag Period to Columns and Depreciation to Values for an instant schedule.
4. Employ Named Ranges – Names such as DepRate or YearEndDate make the formula easier to audit and reduce risks when columns shift.
5. Validate Data on Entry – Use Data Validation drop-downs for Basis and Rate ranges to avoid typos that cause #NUM! errors.
6. Document Assumptions – Add comments or a header section describing basis conventions and fiscal calendars; auditors will thank you.

Common Mistakes to Avoid

1. Mismatched Dates – Entering first_period_end earlier than purchase_date returns #NUM!. Always double-check fiscal year-end after copying templates.
2. Using Percentage Format in Rate Cell Without Converting – Typing 20 percent but cell is formatted General causes rate = 20, yielding nonsense depreciation. Format as Percentage or divide by 100.
3. Ignoring Salvage – Setting salvage to zero by mistake over-depreciates the asset. Reconcile book value to ensure the final period leaves salvage intact.
4. Wrong Basis for Region – A German asset with basis 3 instead of 4 will be off by small amounts each year, compounding into material errors. Implement a drop-down or mapping table.
5. Requesting Periods Beyond Useful Life – Period numbers that exceed life quietly return zero; users sometimes interpret this as an error in the formula rather than the input. Insert a warning column to flag Period > Ceiling(1/rate).

Alternative Methods

Choose AMORLINC when you need proration but want to stay inside vanilla Excel; switch to SLN when the first period is a full year; escalate to Power Pivot once row counts slow down recalc time.

FAQ

When should I use this approach?

Use AMORLINC whenever an asset’s first accounting period is shorter or longer than a year and you require linear depreciation. It is especially useful in multi-national companies complying with French or European standards.

Can this work across multiple sheets?

Yes. Store asset data on a ‘Data’ sheet and reference it from a ‘Depreciation’ sheet. Structured Table names remain valid even when formulas reside on another sheet.

What are the limitations?

AMORLINC only supports straight-line depreciation and one period per call. It does not handle changes in useful life, impairment adjustments, or accelerated methods such as declining balance.

How do I handle errors?

Wrap formulas with IFERROR, use Data Validation for inputs, and add test totals such as cost minus accumulated depreciation equals salvage. Conditional formatting can highlight negative depreciation values.

Does this work in older Excel versions?

AMORLINC is available starting with Excel 2007 for Windows and Excel 2011 for Mac. Users on Excel 2003 or earlier must rely on manual formulas or upgrade.

What about performance with large datasets?

For tens of thousands of rows, turn off automatic calculation during data entry. For hundreds of thousands, load the table into Power Pivot and use DAX. Store date columns as integers to minimize memory usage.

Conclusion

Mastering the AMORLINC function lets you generate accurate, audit-ready straight-line depreciation schedules in minutes, even when assets start mid-period and across different day-count conventions. This not only speeds month-end close but also deepens your overall Excel proficiency—combining dates, financial modeling, and data management skills. Continue practicing by importing your company’s fixed-asset register, applying AMORLINC, and then summarizing results with PivotTables. The more assets you handle, the more time—and headaches—you will save.